Flat-Rates vs. Hourly-Rates: Pros and Cons

The question you are likely to face as you begin your career as a freelance writer is whether to charge a flat-rate or an hourly-rate. There are many pros and cons concerning flat-rates vs. hourly-rates, as solid controversies exist in favor of both options.

Freelance writers remain in a dilemma whether the payment should be calculated by the project or by the hour, although in either case they try to build a long lasting relationship based on trust with the client.

In this article, I will discuss my experiences regarding the pros and cons of flat rates vs hourly rates, to help you decide which is better.

Flat-Rates-

As a client, this is the fairest method of payment- after all; nearly everything else in the world is paid for based on a flat-rate. Most clients want to know how much you are going to charge them before you start on the project, and this holds true for small businesses and individuals, who don’t have large funds.

It is up to the freelance writer to make a good estimate of how much time the project will take, and price accordingly, though if you undercharge, it is a lesson learnt for next time!

Flat- rates work well for new freelance writers, as they are slow in their initial learning phase. Thus, they can take their own time to complete a project after finalizing a date with the client, rather than upset the client if the work was done on an hourly basis and the project got extended way too long.

Pros:

• By charging a flat-rate the client is happy to know the final total of the project.

• Your only worry now is about the project, as you do not have to worry about keeping track of the billed hours or the time.

• There is a guarantee of a fixed amount of payment, even if you finish the job quickly and efficiently. In fact, the time you save on a flat-rate project can be spent on another project, thus you are able to make more money.

• There is clarity between the client and you, as the client knows about the cost of the project right from the start, and you are also assured about the amount you will be paid.

• You tend to put in your best and work harder in order to complete the project on time.

• You get more flexibility to write and are able to distribute the time for various other projects, whether related to writing or not. You have the freedom to split your work between two projects, or work on more than one project at a time.

• Since you know the final amount fixed for the project before commencing work, you can ask for a certain percentage as upfront charges. In fact, you should, as it is a way to share the risk on both sides.

Cons:

• There is a risk you take of doing all the work and not getting paid in the end. Thus, it is always better to ask for some advance before the project commences.

• There is a risk that the project will take longer than the time you had expected, and you end up being underpaid.

• The client may take advantage of you by expanding the project or giving you additional work, but may not be willing to increase the rates.

• The client may request additional requirements and research involved outside the budget, for which you would have to be ready.

• Once the rates are set, even if the price is low, you are stuck with the responsibility to complete the project for your client, even though there is more work involved than you had imagined there to be.

Hourly-Rates –

As a freelance writer, this is also a fair method of payment for you, as you work for only a certain number of hours in the day and get paid for it. Although there are exceptions, but generally hourly-rates mostly work well with large companies who don’t mind charging by the hour.

Based on your invoice, they have programs that can handle paying you regularly with an hourly-rate. For me, hourly rates are too democratic, as they treat all writers as equals, which they never are.

Pros:

• The timings can be accurately tracked and counted.

• There is an assurance that you will get paid for your actual hours of work, and in most cases you even get paid if the project is ceased or changed for any reason.

• You are more confident in getting paid as you can bill throughout the project.

Cons:

• Clients may doubt the number of hours you bill them for.

• There is no guarantee of a minimum amount of payment for a certain project. It is tough to know what the final payment for a project will be and how much it will cost the client.

• Keeping track of your working hours can be a tedious process, and you have to be very meticulous and consistent with it.

• The rates are based on the number of hours, rather than the value you provide to the client.

• Clients expect the hourly-rates to be cheaper than what you may quote.

• Clients may not understand nor be willing to pay for organizing a meeting with you, as it is your valuable time that is wasted.

• Hourly-rates are not beneficial for efficient and experienced freelance writers, as they may be able to complete the work in half the time than what other freelancer writers take, thus ending up in loss due their fast writing speed.

• You don’t have the freedom to work on more than a single project at a time, as you are billed for the number of hours you work. Thus, you have to devote time to that project only, till it is complete.

If you are still in the initial stages of your freelance writing career, and trying to decide what to charge, do check out my article on setting your freelancing writing rates. Remember, it is your own experience and situation that will help you to determine which payment option is more appropriate for you and your client.

You will know the amount of time a certain project takes you to complete, which will help you decide what your hourly rates should be, or whether charging a flat rate would be more advantageous.

One method you can use is to first decide a suitable hourly-rate for your freelance writing project, based on your experience and skills. You can then convert that hourly-rate into a flat-rate, based on how long you think a project will take to finish.

Initially, you may make a few mistakes while trying to decide an appropriate rate, though with time, you will get a feel of the system and build more confidence in setting your price.

Generally, a combination of the two methods works well, though most freelance writers including myself are turning to flat-rates instead of hourly rates because of its various advantages. However, by knowing the pros and cons of flat-rates vs. hourly-rates, you will easily be able to determine which method works best for you!

Do share your experience about how you charge for projects. Do you use a flat-rate or charge by the hour? Share in the comments below.

 

 

Photo Credit: Graur Razvan Ionut

Tagged as: clients, flat-rate, freelance writer, freelance writing project, hourly-rate, working hours, writers, writing, writing projects